The conventional
wisdom states that prosecuting corporations can subject them to terrible
collateral consequences that risk putting them out of business and causing
massive social and economic harm. Under this viewpoint, which has come to
dominate the literature following the demise of Arthur Andersen after that
firm’s prosecution in the wake of the Enron scandal, even a criminal indictment
can be a “corporate death penalty.” The Department of Justice (“DOJ”) has
implicitly accepted this view by declining to prosecute many large companies in
favor of using criminal settlements called deferred prosecution agreements, or
“DPAs.” Yet, there is no evidence to support the existence of the “Andersen
Effect” and the much-hyped corporate death penalty. Indeed, no one has ever
empirically studied what happens to companies after conviction. In this Article,
I do just that. Using the database of organizational convictions made publicly
available by Professor Brandon Garrett, I find that no publicly traded company
failed because of a conviction in the years 2001–2010. Moreover, many
convictions included plea agreements imposing compliance programs that advocates
have pointed to as a key justification for using DPAs. Because corporate
convictions do not have the terrible consequences they were assumed to have, and
because they can be used to obtain compliance programs just as DPAs can, the DOJ
should prosecute more lawbreaking companies and reserve DPAs for extraordinary
circumstances. In the absence of some other justification for using DPAs, the
DOJ should exploit the stronger deterrent value of corporate prosecution to its
full capacity.